Bull Steepening Seen Alongside Post-Data Extension Of Dovish BoE Repricing

Gilts firmed in the wake of the softer-than-expected run of UK monthly GDP and economic activity data, with the contract trading as high as 99.48 before backing off to 99.05 last, +30 or so. The contract sits 10-15 ticks off the base of an early 55 tick range.

• Today’s best levels present the initial point of technical resistance, with last week’s high and the bull trigger breached on the post-data shunt higher.
• That break confirms a resumption of the uptrend from a technical perspective.
• Yields are 3-5bp lower across the curve, with bull steepening seen.
• 10s registered a fresh multi-month yield low at 3.906%, with 3.90% presenting the next obvious level of technical interest there. Last ~3.92%.
• 30s and 50s are back below their respective 200 DMAs.
• Front end gilt outperformance comes on the back of the dovish post-data move witnessed in STIRS.
• SONIA futures last show -0.25 to +6.0.
• ~94bp of cuts remain priced for the totality of ’24, as the early, dovish BoE-dated OIS adjustment holds. The data isn't seen as a gamechanger when it comes to tomorrow's decision/the timing of a first cut (25bp of easing is fully discounted come end of the June '24 MPC).
• GBP2.0bn of 3.75% Oct-53 gilt supply headlines the remainder of the domestic docket today.